Is ING Groep N.V.’s (AMS:INGA) CEO Pay Fair?

In 2013 Ralph A. J. Hamers was appointed CEO of ING Groep N.V. (AMS:INGA). This analysis aims first to contrast CEO compensation with other large companies. Then we’ll look at a snap shot of the business growth. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This process should give us an idea about how appropriately the CEO is paid.

View our latest analysis for ING Groep

How Does Ralph A. J. Hamers’s Compensation Compare With Similar Sized Companies?

At the time of writing, our data says that ING Groep N.V. has a market cap of €20b, and reported total annual CEO compensation of €2.6m for the year to December 2019. We note that’s an increase of 11% above last year. While we always look at total compensation first, we note that the salary component is less, at €1.8m. We took a group of companies with market capitalizations over €7.2b, and calculated the median CEO total compensation to be €4.4m. (We took a wide range because the CEOs of massive companies tend to be paid similar amounts – even though some are quite a bit bigger than others).

This would give shareholders a good impression of the company, since most large companies pay more, leaving less for shareholders. Though positive, it’s important we delve into the performance of the actual business.

The graphic below shows how CEO compensation at ING Groep has changed from year to year.

ENXTAM:INGA CEO Compensation, March 16th 2020
ENXTAM:INGA CEO Compensation, March 16th 2020

Is ING Groep N.V. Growing?

ING Groep N.V. has reduced its earnings per share by an average of 2.4% a year, over the last three years (measured with a line of best fit). In the last year, its revenue is down 9.9%.

Unfortunately there is a complete lack of earnings per share improvement, over three years. And the impression is worse when you consider revenue is down year-on-year. These factors suggest that the business performance wouldn’t really justify a high pay packet for the CEO. It could be important to check this free visual depiction of what analysts expect for the future.

Has ING Groep N.V. Been A Good Investment?

Since shareholders would have lost about 58% over three years, some ING Groep N.V. shareholders would surely be feeling negative emotions. So shareholders would probably think the company shouldn’t be too generous with CEO compensation.

In Summary…

It looks like ING Groep N.V. pays its CEO less than the average at large companies.

Shareholders should note that compensation for Ralph A. J. Hamers is below the median of larger companies. But then, EPS growth is lacking and so are the returns to shareholders. This contrasts with the increase in CEO remuneration on last year, though it was off a low base. We would not call the pay too generous, but nor would we claim the CEO is underpaid, given lacklustre business performance. On another note, we’ve spotted 2 warning signs for ING Groep that investors should look into moving forward.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies, that have HIGH return on equity and low debt.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

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